Gold Down Amid Trade Truce Between China and The United States

Earlier in the day, gold dropped deeper to test the 1,380.00 area for the first time since June 21. With today’s decline, gold is extending its rejection from the 1,440.00, highs since May 2013, reached on June 25.
Mauricio Carrillo
Gold Down Amid Trade Truce Between China and The United States

Most of the gold’s rise was linked to safe-haven demand and speculations for a rate cut that hurt the US dollar.

The agreement between China and the United States is not only fueling risk aversion all over the market but also improving expectations for the global economy.

Therefore, it is also cutting expectations for an aggressive interest rate reduction by more than 25 basis points in July’s FOMC meeting.

The pro-growth trade truce

As Michael McCarthy, chief market strategist, CMC Markets, said in a note to clients, “Reopening of trade talks between U.S.-China has made investors look back at growth, we are seeing good support for the share markets across the region and safe-havens are in less demand.”

So, equities are rallying on Monday as well as the US Dollar index is posting gains on the first day of the week. DXY is now 0.30% positive on the day at 96.40 as the pair advanced amid the trade truce between The United States and China.

Previously, it jumped to test the 200-day moving average at 96.60. The move is hurting gold positions.

Gold down as risk appetite improves

XAUUSD gold daily chart July 1

XAU/USD is falling hard on Monday as investors are betting for riskier assets and leaving safe haven’s gold behind. On the day, gold is trading 1.20% down as it is trading at 1,390.00.

Earlier in the day, gold dropped deeper to test the 1,380.00 area for the first time since June 21. With today’s decline, gold is extending its rejection from the 1,440.00, highs since May 2013, reached on June 25.

To the downside, if the pair extends its decline beyond 1,380.00, XAU/USD will find supports at the 1,360.00 area. Then, 1,330.00 and the 1,300.00 congested zones.

Metals report for July 1

Silver is recovering ground after falling to test the 15.10 area, and it is now still 0.20% negative on the day but moving at 15.30. Technical indicators are mixed on the day with the unit moving between 15.15 and 15.35.

Copper tested the 2.7500 area earlier on the day, but the unit was unable to maintain levels at that high and it started to fall, and it is now trading 0.43% positive on the day at 2.7510.

Palladium is trading in consolidation mode as the unit touched the 1,570.00 area on Friday and it is now moving between 1,535.00 and 1,550.00. The unit is 0.55% positive on the day.

Platinum is extending gains above the 200-day moving average, and it is even reaching fresh highs since May 16 at 841.40. XPT/USD is currently moving at 840.60, 0.60% positive on the day.

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